What to Look For in a Structured Settlement Company

 

The use of structured settlements in large and catastrophic workers’ compensation claims is well recognized as a way to reduce the overall settlement cost while at the same time providing the injured employee with a fair claim settlement.  However, a factor often overlooked in structured settlements is the identification and selection of the best structured settlement company.

 

There are several characteristics and qualities that should be considered in the selection of the structured settlement company.  They are:

 

  1. Experience.

You want a structured settlement company that has a track record.  A structured settlement company that has been around for decades has more resources to draw from then a structured settlement company that has been in business for a few months.  The more structured settlements the company has completed in the past, the greater likelihood that they know how to deal with every possible scenario that could interrupt or prevent a structured settlement from occurring.

 

 

  1. Ability to Design Settlements.

The structured settlement company must have the ability to taken into consideration the needs of everyone including the injured employee and employee’s family, the attorney for the employee, the employer and the employer’s workers’ compensation insurer.  The structured settlement has to be designed to be flexible to address the needs of the employee while maintaining control of the settlement cost for the insurer.

 

The structured settlement company consultant must have an in-depth knowledge of sophisticated damage analysis and life care plans, along with the different types of trusts that can be included in a structured settlement.  By understanding the injured employee’s future financial needs and future medical care, the structured settlement consultant can design a creative solution that benefits all parties involved in the workers’ compensation claim.

 

 

  1. Resources.

A structured settlement is basically an annuity (or annuities) purchased from a life insurance company.  It is therefore essential for the structured settlement company to have several top rated life insurance companies available to provide the annuity/annuities.  By having several highly rated insurance companies available, the consultant can shop the settlement package with the different insurers to obtain the lowest overall cost for the structured settlement.

 

 

  1. Reputation.

There are structured settlement companies that work only with the plaintiff attorneys and there are structured settlement companies that specialize in working only with the defense attorneys.  These companies are well known to both the sides of the legal aisle, and are often mistrusted by the other side.  A structured settlement company that works with both plaintiff attorneys and defense attorneys must maintain a reputation of being unbiased and fair in all their dealings.  By selecting a structured settlement company that has the trust and extensive experience working with both sides of the legal aisle, the mistrust that hampers and prevents some structured settlements from occurring is removed.

 

 

  1. Geographical spread.

The structured settlement company should be somewhat local.  If the structured settlement company has only one office or even several offices in another part of the country, it is difficult for the structured settlement consultant to meet with the various parties involved in the injury claim. An example – if the structured settlement company is located in Florida and the injured party is in California, the structured settlement company will be less effective.  The structured settlement company that has a complete geographical spread and can provide a local consultant whether the injured employee is in Maine, Hawaii or somewhere in between will be able to provide the best service.

 

The proper selection of the structured settlement company can have a significant impact on the cost of the structured settlement.  For assistance in identifying and locating the best possible structured settlement company, please contact us.

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.

 

Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

 

©2013 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional about workers comp issues.

Do Lump Sum Settlements Aid or Detract from Employees Returning to Work

 

 
2,000 Injured Worked Studied for 4 years After Settlement
 
I recently read article from Risk & Insurance Online, where they state that the Boston-based Workers Compensation Research Institute looked at more than 2,000 workers injured in Michigan in 2004 who received lump sum settlements.  The researchers followed their employment experience for the next 4 years. The study found that:
 
  1. Three-quarters of the injured workers who received lump sum settlements did not change their employment status, “which means that many of those who were employed at the time of the lump sum stayed employed and those that were not employed remained unemployed”
 
  1. Of those who did change their employment status, nearly a third who were employed at the time of the settlement left work, and nearly a fifth of those who were not employed attained employment after the settlement.
 
  1. Average employment in the sample increased from 25% of workers at the time of the lump sum settlement to 32% of workers one year after a settlement. “The exception is older workers who experienced a decline in employment after a settlement.”
 
“This is an important study because we need to find out whether settlements discourage return to work for injured workers who want to return to work or assist them in closing this chapter of their life and moving on with their career” said Bogdan Savych, the author and a public policy analyst at the WCRI. [WCx]
 
 
Only small percentage of Employees Looking for an Early Retirement
 
The common consensus or stereotype among adjusters could be that workers trying to obtain a lump sum settlement are in it for the wrong reasons, looking for a way to fund an early retirement and remove themselves from the workforce forever.  Sure this could be true, but obviously this is for a small percentage of the injured workers looking for a lump sum settlement according to this study. 
 
There could be a ton of variables, including age of the worker, type of injury, severity of injury, post-injury medical and physical limitations that could hinder a gainful return to work in the occupation that the worker desires, overall economic reasons forcing a return to work, and so on.
 
Adjusters forget that a person’s life does not end after a settlement has been reached, rather it is just the end of the file for the adjuster.  Obviously younger workers could rarely sustain a prosperous life from the time of their settlement to their death, meaning that they would have to stretch those settlement monies over the course of their whole lifespan.  On the opposite side, and as the study shows, older workers nearing retirement would rarely return to full time gainful employment after a settlement, since they may not need to work anymore, but again this could vary on Pensions, 401ks, savings account amounts, and the like.  It is feasible to state that maybe older workers who wished to retire after a settlement still could not do so, based on their own personal economic needs. 
 
 
In General, People Return to Work After Receiving a Settlement
 
Looking at this from a general broad perspective, this study proves that people return to work after receiving a settlement for their comp injury.  The adjuster has incentive to attempt to resolve the case as soon as they can, because once the settlement is completed the case is off the books of the carrier, and the file is closed forever, if a full/final settlement is to be performed. Plus it ends the case for the injured worker and the employer, and everyone can move on with their life.
 
 
Not Considered in Study is Various Ways to Settle a Case
 
One thing this study did not look at which is important is the various ways to settle a case, including an indemnity-only settlement, which keeps medical open.  This is becoming more and more of a trend, just because it closes one of the expense doors, wage loss, and the adjuster can settle the medical exposure at a later date once a clamant slows down on treating and nears Maximum Medical Improvement.  Making this settlement more common is the involvement of Center for Medicaid and Medicare Services and the need for a Medicare Set Aside to resolve all aspects of a claim if a person’s injury is reportable to Center for Medicaid and Medicare Services because they are on Social Security.  If the worker is billing Medicare for their treatment in error, then there is a huge lien to address with Center for Medicaid and Medicare Services, and this can involve many headaches, and the many months of time that have to go by while the carrier negotiates with Medicare on what is their responsibility to pay, and what is the responsibility of Medicare.
 
Another option is a structured settlement, where an injured worker receives payment from a third party in excess of what a carrier pays to fund the structure, providing incentive to the injured worker to take this type of settlement because in the end they will net more monies than if they just took a check from the carrier to settle.  The downside for the worker is that they do not get all of the settlement money up front, but rather in monthly payments over a specific period of years, with interest attached.   [WCx]
 
 
Summary
 
Speaking generally, the study proves that a worker will indeed return to work after a settlement is obtained.  What the study fails to take into account is the several factors that go in to accepting a settlement, and then having to either return or not return to the workplace.  Making it more complicated is the varying types of settlements that are out there, and becoming more and more popular as conditions warrant.  I believe the most important thing to take away from this study is that when considering settlement; adjusters should not look at it as the worker looking for an early exit out of the workforce.  Instead look at it as a way of resolving the claim, so all parties can move forward. 
 
Sure, if adjusters are pessimistic and are viewing the settlement only as a way for the worker to obtain a lifelong vacation, this can hinder negotiation.  Instead adjusters should put themselves in the boots of their injured claimants. What would they do if they were faced with these options, and how can you make it be the most attractive as a way to end a claim?  Should it be lump sum, structured, indemnity-only, or anything else?  Is the claimant in need of lifelong medical care, or have they reached Maximum Medical Improvement and they are as good as they are ever going to be? And no matter what the answers are to these questions, what type of settlement would benefit all parties?  It is when we answer these questions, and place ourselves on the other side of the fence, that we can settle claims in a beneficial way to all parties, and move on to the next challenging claim that awaits us. 
 
 
 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

The Most Important Time in A Workers Comp Claim Settlement Is…

 

Best Settlements Start Day of Accident
 
A common mistake made by employers (and some workers’ compensation adjusters, too) is to believe that the settlement value of the claim is based on the actions taken when the employee has finished the medical treatment and has indicated he/she wants to settle their claim.  All the negotiations tactics and claim strategy when the employee has finished his/her medical treatment have an impact on the settlement value of a workers’ compensation claim, but are by no means the only factors in a claim settlement.  The best settlements don’t start at the end of the medical treatment; the best settlements start the day of the accident. [WCx]
 
Get to Work on Claim Immediately
 
One of the most important steps an employer and the workers’ compensation adjuster can take to optimize the settlement value of the claim is to start work on the claim immediately.  This entails the employer reporting the claim to the claims office within minutes (not hours or days) of the employee reporting the accident/injury.  The immediate reporting of the claim allows the work comp adjuster the opportunity to:
 
  • Make same day contact with the employee, employer and medical provider
  • Completely investigate the accident details
  • Determine if there are issues in regards to compensability
  • Establish the nature and extent of the injury to prevent the employee from later adding additional medical issues to the claim and increasing the eventual settlement value
  • ·Control the selection of the medical provider in those states where the employer/insurer select the medical provider
 
If there are issues with compensability, it is much easier to negotiate the settlement of the claim later, if the compensability issues have been properly evaluate and established at the start of the claim. 
 
Every Action Taken Impacts Settlement
 
The settlement value of the claim is not simply controlled by handling the claim in accordance to Best Practices at the start of the claim.  Every action the claims adjuster and the employer take between the initial investigation of the claim and the settlement negotiations will also impact the settlement value of the claim. 
 
This includes:
 
  • Maintaining on-going contact with the employee and the medical provider
  • Arranging for the employee to return to work light duty / modified duty as soon as the medical provider will permit
  • ntegration of the medical management into the claim handling activities
By continuing to manage the workers’ compensation claim in accordance to Best Practices, every step taken in handling the claim moves it closer to the appropriate settlement.  
 
Additional Factors to Consider
 
When the medical treatment has ended, or the employee or the employee’s attorney indicates the desire to settle the claim, there are numerous additional factors that come into play in establishing the settlement value and obtaining the best possible settlement.  The adjuster will consider:
 
  • The permanent impairment rating, if any (including an independent medical evaluation in some situations)
  • The jurisdictional requirements
  • The value of future medical treatment
  • The impact of preexisting medical conditions, where permitted
  • The employee’s indemnity rate (whether permanent partial disability or permanent total disability)
  • The exposure for future indemnity cost
  • The cost of litigation, if needed to resolve the claim
  • The cost of rehabilitation, if needed
  • The cost of vocational training, if needed
  • The value of death and funeral benefits, if applicable
  • The value of any offsets
  • Any other strengths and weaknesses of the both sides of the negotiations
When the employee’s injuries are complex or the value of the claim is disputed, the adjuster can utilize a reserve worksheet to assist in the establishment of the value.  On the reserve worksheet, each of the above factors is given a value.  The monetary values of all factors that are a part of the claim are combined to establish the settlement value.
 
When the employee has an attorney representing him/her, the employee’s attorney will follow a similar approach to establish the settlement value of the claim.  The attorney will attempt to maximize the settlement value of the claim in order to maximize the attorney’s own income.  However, the employee’s attorney will know the true value of the claim, regardless of what the employee’s attorney maintains the value is in the settlement negotiations. Most claims settle without lengthy litigation because when both parties have evaluate the same factors in the same manner, the estimated value of the claim will be similar, which allows for a negotiated settlement of the claim. [WCx]
 
The settlement value of a claim is influenced by the adjuster’s compliance with Best Practices throughout the course of the claim, from the day of the accident to the day the employee reaches the point where negotiation of the claim settlement can start.  The factors that impact the settlement can be evaluated individually and combined to determine the overall settlement value.
 
 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

How to Most Effectively Handle Workers Comp Claims

A common mistake made by employers (and some workers compensation adjusters) is to believe that the settlement value of the claim is based on the actions taken when the employee has finished the medical treatment and has indicated he/she wants to settle their claim. All the negotiations tactics and claim strategy when the employee has finished his/her medical treatment have an impact on the settlement value of a workers compensation claim, but are by no means the only factors in a claim settlement. The best settlements do not start at the end of the medical treatment; the best settlements start the day of the accident.

 
 
One of the most important steps an employer and the workers compensation adjuster can take to optimize the settlement value of the claim is to start work on the claim immediately. This entails the employer reporting the claim to the claims office within minutes (not hours or days) of the employee reporting the accident/injury. The immediate reporting of the claim allows the workers comp adjuster the opportunity to:[WCx]
 
-Make same day contact with the employee, employer and medical provider. For companies using nurse triage, the triage nurse will be the first point of contact. Ask the nurse to contact the injury coordinator;  the employer will also receive a daily triage report.
-Completely investigate the accident details, take photos and written statements.
-Have the employee detail IN WRITING what happened. Have employee circle the affected body part.
-Determine if there are issues in regards to compensability
-Establish the nature and extent of the injury to prevent the employee from later adding additional medical issues to the claim and increasing the eventual settlement value
-Control the selection of the medical provider in those states where the employer/insurer select the medical provider
 
 
If there are issues with compensability, it is much easier to negotiate the settlement of the claim later, if the compensability issues have been properly evaluated and established at the start of the claim. 
 
 
The settlement value of the claim is not simply controlled by handling the claim in accordance to Best Practices at the start of the claim. Every action the claims adjuster and the employer take between the initial investigation of the claim and the settlement negotiations will also impact the settlement value of the claim. This includes:
 
-Maintaining on-going contact with the employee and the medical provider
-Arranging for the employee to return to work light duty / modified duty as soon as the medical provider will permit
-Integration of the medical management into the claim handling activities
 
 
By continuing to manage the workers compensation claim in accordance to Best Practices, every step taken in handling the claim moves it closer to the appropriate settlement.  
 
 
When the medical treatment has ended, or the employee or the employee’s attorney indicates the desire to settle the claim, there are numerous additional factors that come into play in establishing the settlement value and obtaining the best possible settlement. The adjuster will consider:
 
-The permanent impairment rating, if any (including an independent medical evaluation in some situations). If the rating looks too high, have the TPA arrange for a peer-to-peer physician to review the file.
-The jurisdictional requirements
-The value of future medical treatment
-The value of life care planning needs, future medication and durable medical equipment
-The impact of preexisting medical conditions, where permitted
-The employee’s indemnity rate (whether permanent partial disability or permanent total disability)
-The exposure for future indemnity cost
-The cost of litigation, if needed to resolve the claim
-The cost of rehabilitation, if needed
-The cost of vocational training, if needed
-The value of death and funeral benefits, if applicable
-The value of any offsets
-Any other strengths and weaknesses of the both sides of the negotiations
 
 
When the employee’s injuries are complex or the value of the claim is disputed, the adjuster can utilize a reserve worksheet to assist in the establishment of the value. On the reserve worksheet, each of the above factors is given a value. The monetary values of all factors that are a part of the claim are combined to establish the settlement value. 
 
 
When the employee has an attorney representing him/her, the employee’s attorney will follow a similar approach to establish the settlement value of the claim. The attorney will attempt to maximize the settlement value of the claim in order to maximize the attorney’s own income. However, the employee’s attorney will know the true value of the claim, regardless of what the employee’s attorney maintains the value is in the settlement negotiations. Most claims settle without lengthy litigation because when both parties have evaluate the same factors in the same manner, the estimated value of the claim will be similar, which allows for a negotiated settlement of the claim.[WCx]
 
 
The settlement value of a claim is influenced by the adjuster’s compliance with Best Practices throughout the course of the claim, from the day of the accident to the day the employee reaches the point where negotiation of the claim settlement can start. The factors that impact the settlement can be evaluated individually and combined to determine the overall settlement value.

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 

  
WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com
MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-calculator.php

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

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